Make The World
More Sustainable[Provisional Translation Only]
This English translation of the original Japanese document is provided solely for information purposes.
Should there be any discrepancies between this translation and the Japanese original, the latter shall prevail.

September 14, 2022
IssuerIchigo Hotel REIT Investment Corporation (“Ichigo Hotel,” 3463)
1-1-1 Uchisaiwaicho, Chiyoda-ku, Tokyo
Representative: Osamu Miyashita, Executive Director
www.ichigo-hotel.co.jp/en
Asset Management Company
Ichigo Investment Advisors Co., Ltd.
Representative: Hiroshi Iwai, President
Inquiries: Hidehito Iwasaka, Head of Ichigo Hotel
Tel: +81-3-3502-4892

Hotel Acquisition (Hotel Sunshine Utsunomiya)
Ichigo Hotel decided today to acquire the Hotel Sunshine Utsunomiya in Tochigi
Prefecture.
1. Acquisition Summary
Hotel Name

Hotel Sunshine Utsunomiya

Hotel Number1

B-3 028

Hotel Type

Lodging-focused

Date Built

February 1991

Form of Ownership

Trust beneficiary interest in real estate (juekiken)

Appraisal Value2

JPY 2,400,000,000

Acquisition Price3

JPY 2,200,000,000

Seller4

Takara Leben Real Estate Investment Corporation

Contract Date

September 14, 2022

Closing Date

September 20, 2022

Financing Method

Cash-on-handSettlement Method

Lump-sum payment

1

The initial letter “B” is Ichigo Hotel’s region code for where the hotel is located, in
this case Kanto. Please see page 9 for region code details.
2
Appraisal Value is calculated by Tanizawa Sogo Appraisal as of August 1, 2022, and isin compliance with the appraisal guidelines of Ichigo Investment Advisors (“IIA”) as
well as the rules of the Investment Trusts Association of Japan.
3Acquisition Price excludes incidental expenses such as fees and property, city
planning, and consumption taxes.
12. Acquisition Rationale
Ichigo Hotel continues to execute on its strategy to build a stable, diversified portfolioand drive shareholder value. As part of this strategy, Ichigo Hotel decided to acquire theHotel Sunshine Utsunomiya, a lodging-focused hotel in Utsunomiya City, Tochigi
Prefecture, an area with stable business and leisure demand.
The Hotel Sunshine Utsunomiya is a five-minute walk from Utsunomiya Station on theJR Tohoku Main Line and Tohoku/Yamagata/Akita Shinkansen, and caters to businessand leisure demand. Utsunomiya City is expected to see stable business demand,serving as home to government buildings such as the Tochigi Prefectural Government
Building, and the Kiyohara Industrial Park, an inland industrial park that is one of thelargest in Japan. The area is also expected to see leisure demand as the hub to major
tourist attractions such as Nikko Toshogu Shrine and Lake Chuzenji, as well as venues
for various sporting events.
Ichigo Hotel will acquire the hotel using proceeds from a January 2020 hotel sale andcash-on-hand.
Ichigo Hotel has a fixed-rent lease with the hotel’s operator, which will drive earnings
stability and geographic diversification.

23. Description and Location of the Hotel Sunshine Utsunomiya
The Hotel Sunshine Utsunomiya is a lodging-focused hotel located within a five-minute
walk from Utsunomiya Station on the JR Tohoku Main Line andTohoku/Yamagata/Akita Shinkansen.
The hotel is located in an area with lodging-focused hotels, low-rise offices, hospitals,and restaurants. As part of the redevelopment of the area around Utsunomiya Station
East Exit, Utsunomiya Terrace, a retail complex opened in August 2022, in line with theLight Rail Transit (LRT) scheduled to open in August 2023. The area is expected togrow as a commercial district, with Light Cube Utsunomiya, a convention center,scheduled to open in November 2022.
The guest rooms are mostly single-bed rooms, and with some double rooms, capable ofaccommodating the diverse needs of travelers.

3

Legal Form of Asset
Trustee
Period of Trust Contract
Location
Property RightAreaLandZoningCoverage Ratio
Floor Area Ratio
Property RightUse
Building Structure1
Total Floor Area
Date Built
AppraiserAppraisal Value
Appraisal Date
Value by Direct Capitalization
MethodNumber of Guest Rooms
Architect2
Builder2
Structural Designer2
Inspection Agency2
PML (Assessor)
Collateral
Tenant Overview
Number of Tenants
Rental Income
Deposit
Leasable Area
Leased Area
Occupancy

Hotel Details
Trust beneficiary interest in real estate (juekiken)
Mizuho Trust Bank, Limited
April 21, 2017 – September 30, 2032 (Expected)
2-3-3 Higashi Shukugo, Utsunomiya City, Tochigi
Freehold
1,038.28m2
Commercial
80%600%
Freehold
Hotel
Steel 1 Basement & 13 Floors
5,397.36m2
February 20, 1991Tanizawa Sogo Appraisal Co., Ltd.
JPY 2,400,000,000
August 1, 2022
JPY 2,480,000,000160
Shimiz DESIGN
Shimizu Corporation
Shimiz DESIGN
Utsunomiya City
0.2% (Sompo Risk Management Inc.)
None
Lease Details
1The hotel operator did not provide consent to disclose leasedetails. Ichigo Hotel has a fixed-rent lease with the operator.
Lease deposit: JPY 31,981,899. No guarantee deposit.
5,267.16m2
5,267.16m2
MarchAprilMay
June
July
2022
2022
2022
2022
2022
100%100%100%100%100%4Property ManagementCompanyMaster Lease Company
Master Lease TypeAppraisal NOI Yield4
Post-Depreciation NOI Yield5

Samty Property Management Co., Ltd.
GK S Hotel Operations Utsunomiya
Rent Guarantee/Pass-Through
6.05%
5.30%
Special Items

An engineering report indicates the following issues with the building. The seller has agreed torectify them at the seller’s expense by the acquisition date.
1. A valid outdoor signage permit has not been confirmed for the hotel’s outdoor signboards.
2. The width of the door installed at the outdoor evacuation staircase on the east side of thebuilding is less than the required 90cm, same as the staircase width.
3. The concrete block wall on the east side of the hotel measures over 1.2-meters high, but isbuttress-free.
4. The entrance of the store on the first floor encroaches within 2 meters of the outdoor
evacuation staircase on the east side of the hotel. Also, the fire-resistance requirements of
the outer wall within the fire spread perimeter cannot be confirmed.
5. Issues (buttress-free wall and lighting equipment installment failure) were indicated in theNovember 2021 Periodic Inspection Report of Specific Buildings.
1Building Structure refers to the structure described in the real estate registry.
Names of the architect, builder, structural designer, and inspection agency are those as ofwhen the building was built.
3Rental Income includes all rent from hotel facilities.
4Appraisal NOI Yield = Appraisal NOI (Net Operating Income) in the real estate appraisal
report divided by the Acquisition Price. This figure is independently calculated by IIA
based upon the above data and is therefore not in the real estate appraisal report itself.
5Post-Depreciation NOI Yield = Appraisal NOI in the real estate appraisal report minus
Depreciation, divided by the Acquisition Price. Depreciation is independently calculated
by IIA using the straight-line method, and the Post-Depreciation NOI Yield is calculated
by IIA based upon the above data and are therefore not in the real estate appraisal report
itself.
25Hotel Name
Appraisal Value
Appraiser
Appraisal Date

Appraisal Value
Value by Direct
Capitalization Method
IncomeMaximum
Obtainable Rental
IncomeVacancy LossExpenses
Administrative &MaintenanceExpenses
Utility Expenses
Repair Expenses
PM FeeLeasing
Brokerage FeesTaxes
Insurance
Premiums
Other Expenses
Net Operating
Income (NOI)
Income on
Investment ofDeposits Received
CapitalExpenditure

Appraisal Details
Hotel Sunshine Utsunomiya
JPY 2,400,000,000
Tanizawa Sogo Appraisal Co., Ltd.
August 1, 2022
AmountNote
Calculated using an income approach,with a DCF valuation as a basis and
JPY 2,400,000,000
verified using a direct capitalization
valuation
JPY 2,480,000,000
Income based on income andJPY 150,097,126 expenditure forecast and reference tosimilar assets
JPY 150,743,604
JPY 646,478
JPY 17,092,137– Borne by tenant– Borne by tenant
Based on engineering reports andJPY 5,355,000
reference to similar assets
JPY 1,560,000 Based on estimates
Based on tenant acquisition costs at
JPY 112,050
similar assets for the retail section
Based on FY2022 actual amounts
JPY 9,508,900(including depreciable asset tax)
JPY 406,090 Based on insurance estimates
JPY 150,097 Based on reference to similar assets
JPY 133,004,989
JPY 61,415
JPY 11,475,000

FF&E Reserve
Net Profit

Based on a 1.0% investment yield fordeposits received for the retail section
Based on engineering reports andreference to similar assets– Borne by tenant
JPY 121,591,404
Based on transactions of similar assets
while taking into account the asset’s
4.9% location and specific characteristics,rights, and terms and conditions of thecontract

Cap Rate

6

Value via DCF Method

JPY 2,370,000,000

Discount Rate

5.0% Base rate adjusted for individual risks

Terminal Cap Rate

5.1% Cap rate adjusted for uncertainties

Value via Cost Approach
Ratio of Land

JPY 2,090,000,000
71.5%

Ratio of Building

28.5%

Building value divided by the sum ofbuilding and land values

Notes
None
4. Seller Profile
Name
Address
Representative
CapitalEstablishment
DateNet Assets
Total Assets
Major
Shareholder andShareholding
Ratio(as of August 31,2022)
Principal BusinessTakara Leben Real Estate Investment Corporation
1-14-15 Akasaka, Minato -ku, Tokyo
Executive Director Testuo Saida
JPY 63,801 million (as of September 1, 2022)

JPY 59,320 million (as of February 28, 2022)
JPY 121,319 million (as of February 28, 2022)
The Master Trust Bank of Japan, Ltd. (Trust Account)
Custody Bank of Japan, Ltd. (Trust Account)
The Nomura Trust and Banking Co., Ltd. (TrustAccount)
Takara Leben Co., Ltd.
JP MORGAN CHASE BANK 385771
Real estate investment and asset management

Relationship withIchigo Hotel orIIA

The seller does not have any capital, personnel, or business relationshipof note with Ichigo Hotel or IIA. In addition, the seller is not a related
party as defined in the Enforcement Ordinance of the Investment Trustand Investment Corporation Law or the internal rules of IIA.

September 11, 2017

5. Ownership History
The seller of the Hotel Sunshine Utsunomiya is not a related party.

714.1%
10.6%
4.2%
2.5%
1.6%

6. Broker ProfileName

The broker did not provide consent to disclose its name.

Relationship withIchigo Hotel or IIA

The broker does not have any material capital, personnel,
or transactional relationship with Ichigo Hotel or IIA. Inaddition, the broker is not a related party as defined in theEnforcement Ordinance of the Investment Trust andInvestment Corporation Law or the internal rules of IIA.

Broker Fee

The broker did not provide consent to disclose the fee.

7. Acquisition Schedule
Ichigo Hotel Board Resolution DateContract Date
Acquisition and Settlement Date

September 14, 2022
September 14, 2022
September 20, 2022 (Expected)

8. Earnings Impact
The impact of the acquisition of the Hotel Sunshine Utsunomiya on Ichigo Hotel’sJanuary 2023 and July 2023 earnings forecasts is detailed in today’s release, “July 2022
Fiscal Period Earnings.”
Appendix A: Engineering Report Summary
Inspector Name
Inspection Date
Short-Term Repair Expenses1
Long-Term Repair Expenses2
Current Replacement Cost

Tokio Marine dR Co., Ltd.
July 2022–JPY 231,862,000
JPY 1,528,400,000

1

Short-Term Repair Expenses are defined as repair expenses considered necessary
beyond the scope of ordinary maintenance within a year from the time of inspection.
2Long-Term Repair Expenses are defined as cumulative repair expenses considerednecessary for the maintenance of the hotel within twelve years from the time ofinspection.

8

Appendix B: Post-Acquisition Portfolio
HotelNo.1

Hotel Name

A-1 004
A-2 008
A-3 018B-1 020B-2 027B-3 028
C-1 012
C-3 016
C-4 025
D-1 006
D-2 003
D-3 011
D-4 019E-1 001E-3 005
E-4 007
E-5 010F-1 017
F-2 015
F-3 021F-4 022
F-5 024
F-6 026
G-1 009
G-3 023
1Prefecture

Hokkaido
Nest Hotel Sapporo Ekimae
Hokkaido
Nest Hotel Sapporo Odori
Hokkaido
Comfort Hotel Kushiro
Kanagawa
Capsule Plus Yokohama
NaganoComfort Hotel Nagano
Hotel Sunshine
Tochigi
Utsunomiya
Tokyo
Smile Hotel Tokyo Asagaya
Hotel Livemax NihombashiTokyo
HakozakiTokyo
HOTEL EMIT SHIBUYA
Shizuoka
Comfort Hotel Hamamatsu
Hotel Wing International
Aichi
NagoyaComfort Hotel Central
Aichi
International AirportMie
Comfort Hotel Suzuka
Kyoto
Smile Hotel Kyoto Shijo
The OneFive OsakaOsakaSakaisujiHotel Wing International
HyogoKobe Shin Nagata Ekimae
Nest Hotel Osaka
Osaka
Shinsaibashi
Okayama
The OneFive Okayama
Ehime
Nest Hotel Matsuyama
Urbain Hiroshima Executive Hiroshima
The OneFive Garden
OkayamaKurashiki
Hiroshima
Valie Hotel Hiroshima
Washington Hotel Plaza
Yamaguchi
Shimonoseki Eki Nishi
The OneFive Fukuoka
FukuokaTenjinKumamoto
Nest Hotel Kumamoto
Total 25 Hotels

Fixed Rent
Variable Rent
Fixed Rent

Acquisition
Price2(JPY million)
2,160
1,450300
1,490670

Fixed Rent

2,200

4.0

Variable Rent

3,910

7.1

Fixed Rent1,360

2.5

Variable Rent
Fixed Rent

3,700
1,550

6.8
2.8

Variable Rent

2,670

4.9

Fixed Rent

5,308

9.7

Fixed Rent
Variable Rent

300
4,4800.5
8.2

Variable Rent

1,630

3.0

Variable Rent

1,490

2.7

Variable Rent

7,600

13.9

Variable Rent
Variable Rent
Fixed Rent

1,200
1,610
1,800

2.2
2.9
3.3

Variable Rent

1,725

3.1

Variable Rent

1,500

2.7

Fixed Rent

1,080

2.0

Variable Rent

1,380

2.5

Variable Rent

2,220
54,783

4.1
100

LeaseTerms
Variable Rent
Variable Rent

% ofPortfolio3

The initial letter (A, B, etc.) is a region code which identifies the area in which the hotel is located.

CodeARegion
Hokkaido/Tohoku

BKantoCTokyoPrefectures
Hokkaido, Aomori, Iwate, Miyagi, Akita, Yamagata, Fukushima
Ibaraki, Tochigi, Gunma, Saitama, Chiba, Kanagawa, Yamanashi,Nagano, Niigata
Tokyo
93.9
2.6
0.5
2.7
1.2

DE
F

Hokuriku/TokaiKinki
Chugoku/Shikoku

G

Kyushu/Okinawa

Toyama, Ishikawa, Fukui, Gifu, Shizuoka, Aichi, MieOsaka, Hyogo, Kyoto, Shiga, Nara, Wakayama
Tottori, Shimane, Okayama, Hiroshima, Yamaguchi, Kagawa,Tokushima, Kochi, Ehime
Fukuoka, Saga, Nagasaki, Kumamoto, Oita, Miyazaki, Kagoshima,
Okinawa

2Acquisition Price is the price as indicated in the purchase and sales agreement for the hotel(excluding fees and incidental expenses such as property, city planning, and consumption taxes).
3% of Portfolio is the Acquisition Price of each hotel as a percentage of the Total Acquisition Pricefor the portfolio, rounded to the nearest tenth.

10